Tata funding comes with a JLR warning
Tata itself spoke of a “positive trend” in financial markets and “improvement in general liquidity”, while JLR chief executive David Smith said: “It is a positive sign for our business that we have been able to attract sufficient funding for our short-term needs through normal commercial means.”
Prof Badack Yazdami, the dean of Nottingham Business School and a former head of product development operations at JLR, welcomed yesterday’s development, but stressed the loan would help to ease the company’s short term cash flow needs, not secure its longer term future.
“This is a sound business that in normal conditions could go to a bank and ask for favourable finance,” Prof Yazdani said.
“This will help them to run the business but it may mean there will be some business restructuring to be done.”
The need to pare down costs could mean closure for one of JLR’s three factories, Castle Bromwich in Birmingham, Lode Lane in Solihull and Halewood on Merseyside. Such a development has been discussed for some time with Halewood thought to be the most vulnerable of the three.
In contrast with the two West Midland plants where the summer shutdown was cut from three weeks to two to start building up stocks of new models such as the Jaguar XJ, production at Halewood will stop for three weeks in September. The plant is also losing 300 jobs as the Jaguar X-Type, one of only two models built there, comes to a premature end.
But Prof Yazdani said yesterday: “Halewood is the most efficient and effective plant in the JLR stable. It would be very bad to shut Halewood, but this is part of the conundrum because it does not mean that Castle Bromwich and Lode Lane are not good.
“Tata has said it is committed to keeping all three plants, but all serious business people would have to consider.”
David Smith said: “We have been forced to take unprecedented actions through this tough economic crisis and the environment is still very challenging.
“It will continue to be so for some time to come and we will continue to take further actions to secure the future of the business.”
